This means IDBI will be able to get a rating from CARE (which was promoted by IDBI). However, the IDBI will have to get a second rating from other agencies like CRISIL or ICRA. ``Such a norm will ensure that rating agencies continue to get good business from their promoters in the future. For rating agencies, promoters are a good source of income,'' said a source.

The SEBI board is expected to clear the guidelines at its meeting on Wednesday. The draft guidelines prepared by the SEBI had suggested a total ban on credit rating agencies to assess bonds, debentures and other financial instruments floated by their promotersholding more than 10 per cent equity. The guidelines also prevented promoters to have representations on the board of the rating agencies.

``Rating agencies don't have any problem in appointing outsiders on their boards. However, they would prefer to rate their promoters. Financial institutions like IDBI, ICICI and IFCI frequently enter the capital market with bonds and debentures. Each time they will have to get rating from agencies,'' sources said. Instead of barring agencies from rating promoters instruments, the regulator should make it mandatory for promoters to get their instruments rated from two rating agencies instead of one.

However, mandatory rating by more than one agency was not going to make much of a difference for promoters as most of them get their instruments rated by more than one firms. The new rules would be applicable to only fresh issues floated by the promoters and the rating firms would be allowed to continue the ratings of existing financial instruments of promoters.

The SEBImove to ban rating of promoters by rating agencies follows widespread allegations that such agencies have been giving favourable rating to them. When the business environment was unfavourable to promoters, rating agencies continued to give top rating to promoters like IDBI, ICICI and IFCI. It was only recently that ICRA downgraded its promoter IFCI which registered a whopping fall in its net profits and a steep rise in non-performing assets (NPAs). CRISIL (which was promoted by ICICI and others) two weeks ago warned against the poor asset quality of ICICI and IDBI.

Regarding the removal of promoter representative from the board of a rating firm, industry sources said this was also not expected to have much impact as two rating agencies CRISIL and ICRA did not have any representatives of promoters on their boards. Currently, there are four rating agencies in the country - CRISIL, ICAR, CARE and Duff and Phelps.

India is among the few countries in the world where guidelines for credit rating firms areexpected to be framed. Globally rating firms are considered as independent bodies with freedom of expressing their opinion on the creditworthiness.